When transferring a Noodles & Company franchise, what is Noodles & Company's right regarding offers from potential buyers?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
14.06 Noodles & Company's Right of First Refusal. If you or any of your Owners desire to transfer the Franchise for legal consideration, you or such Owner must obtain a bona fide, executed written offer from a responsible and fully disclosed purchaser and must deliver immediately to us a complete and accurate copy of such offer. If the offeror proposes to buy any other property or rights from you or any of your Owners or Affiliates (other than rights under Area Development Agreements or other franchise agreements for Noodles & Company Restaurants) as part of the bona fide offer, the proposal for such property or rights must be set forth in a separate, contemporaneous offer that is fully disclosed to us, and the price and terms of purchase offered to you or your Owners for the. transfer of the Franchise must reflect the bona fide price offered therefore and may not reflect any value for any other property or rights.
We have the option, exercisable by notice delivered to you or your Owners within 60 days from the date of delivery of a complete and accurate copy of such offer to us to purchase such interest for the price and on the terms and conditions contained in such offer, provided that: (a) we may substitute cash for any form of payment proposed in such offer; (b) our credit shall be deemed equal to the credit of any proposed purchaser; and (c) we will have not less than 90 days from the option exercise date to consummate the transaction. We have the right to investigate and analyze the business, assets and liabilities and all other matters we deem necessary or desirable in order to make an informed investment decision with respect to the fairness of the terms of our right of first refusal. We may conduct such investigation and analysis in any manner we deem reasonably appropriate, and you and your Owners must cooperate fully with us in connection therewith.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Noodles & Company holds the right of first refusal when a franchisee intends to transfer their franchise. This means that if a franchisee receives a legitimate offer from a potential buyer, the franchisee must present Noodles & Company with a complete and accurate copy of that offer. This requirement ensures transparency and allows Noodles & Company to assess the proposed transfer. If the offer includes the purchase of other property or rights, these must be outlined in a separate, contemporaneous offer to ensure the franchise's price reflects its true value.
Noodles & Company has the option to purchase the franchise interest themselves, matching the price and terms of the offer received by the franchisee. Noodles & Company must notify the franchisee of their decision within 60 days of receiving the offer. Noodles & Company can substitute cash for any proposed form of payment and their credit is considered equal to any proposed purchaser's credit. Noodles & Company is granted at least 90 days from the option exercise date to finalize the transaction.
To make an informed decision, Noodles & Company has the right to investigate and analyze all aspects of the business, assets, and liabilities related to the franchise. The franchisee and their owners are obligated to fully cooperate with Noodles & Company during this investigation. This right of first refusal allows Noodles & Company to maintain control over who enters their franchise system and ensures that any transfer aligns with their strategic interests. This is a fairly standard practice in franchising, allowing franchisors to protect their brand and maintain consistent standards across their network.